2017 (12) TMI 234 - AT - Service Tax

Short payment of service tax - works contract - Held that - the law is well settled by the Hon ble Supreme Court in the case of CCE, Kerala Vs. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT that composite contract involving execution of job and for supply of material on payment of VAT should be classifiable under the works contract service w.e.f 01.06.2007. Thus, in view of the settled position of law, the appellant is not liable to pay service tax upto 01.06.2007 - the appellant has provided the computation sheet showing its liability of service tax for the period from 01.06.2007 to 29.02.2008 as ₹ 2,99,200/-. Since this particular aspect has not been dealt with by the adjudication authority, the matter should go back to the original authority for verification of such computation sheet and for the determination of the exact service tax liability to be paid by the appellant for period 01.06.2007 to 29.02.2008. Valuation - includibility - free supply material in the gross value - Held that - this Tribunal in the case of Yadav Fabricator & Contactor 2017 (4) TMI 562 - CESTAT NEW DELHI has held that free supply items from the recipient of service to the provider of service is not to be considered for calculation of the gross amount for payment of service tax. Thus, free supply items will not be included for computation of the gross amount for the purpose of levy of service tax - since the original authority has not recorded any specific findings with regard to actual free supply materials involved in execution of works contract, we are of the view that the matter should be remanded to him for consideration of the value of free supply material received by the appellant from the service receiver for execution of the works contract. Appeal allowed by way of remand.

Summary

Issues:
1. Classification of services provided by the appellant under the contract with M/s. IOCL for service tax purposes.
2. Calculation of service tax liability for the period 2005-2008 and 2008-2009.
3. Inclusion of the value of free supply material in the gross value for service tax payment.
4. Short payment of service tax amount of &8377; 66,326/-.

Analysis:
1. The appellant was awarded a contract by M/s. IOCL for various works, and the Service Tax Department classified the services under "Commercial & Industrial Construction Service." The appellant argued that the services should be classified under Works Contract Service. The Tribunal noted that the appellant had paid Sales Tax/VAT on the material supplied for the contract, which should classify the service under works contract service. The matter was remanded to the original authority for verification of the service tax liability for the relevant period.

2. The service tax demand for the period 2005-2008 was contested by the appellant, claiming a lower liability under works contract service. The Tribunal directed a reevaluation of the service tax liability for the period 01.06.2007 to 29.02.2008 based on the appellant's computation sheet. The matter was referred back to the original authority for a determination of the exact service tax liability.

3. The appellant disputed the inclusion of the value of free supply material in the gross value for service tax payment. The Tribunal referenced precedents stating that free supply items should not be considered for service tax calculation. However, as specific findings were lacking, the matter was remanded to the original authority for consideration of the free supply material and granting the benefit of abatement accordingly.

4. The appellant failed to provide evidence to counter the short payment of service tax amount of &8377; 66,326/-. The Tribunal upheld the original authority's decision on this issue, as no plausible evidence was presented. The appeal was disposed of based on the above analysis.